Hospitals big testifies before City Council committee on plan to erase massive deficit

The new head of New York City's cash-strapped public hospital network has cut $16 million in consulting costs since he started two months ago — but the system is losing up to $190 million a year for unbilled services to the insured.

"The reality is at this moment we are subsidizing insurance companies," NYC Health + Hospitals CEO Dr. Mitchell Katz, the system's new head, testified to the new hospitals committee of the City Council Wednesday.

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Katz, who previously led Los Angeles' public hospitals, said increasing the number of insured patients at Health + Hospitals was a top priority — as was chasing down their insurance companies to pay their bills. That will help support the network's core mission of serving those without insurance, he said.

"I want to welcome every uninsured person," he said. "But there's nothing wrong with us also seeing people who have insurance. There's nothing wrong with us sending insurance companies a bill that is correctly coded so that we have enough money to take care of everybody else."

The network has estimated it loses between $130 million and $190 million a year by not properly billing insured patients. Offering an example, Katz cited Health + Hospitals paying $21 million for prescription drugs at its nine skilled nursing care centers — where almost every patient is insured.

"We are only getting $5 million revenue for $21 million of drugs. That's impossible. That's impossible because we're talking about skilled nursing facilities where there are almost no uninsured patients," he said.

Along with bringing in more cash, Katz said he's making cuts where he can — and consultants are top of the list with a $16 million cut since his arrival.

"You cannot transform an organization with a consultant. It does not work," he said. "To transform organizations you have to work with the people who are in the organization. They already know what needs to be done."

The new committee is chaired by Councilwoman Carlina Rivera (D-Manhattan).